10 Notorious Instances of Foreclosure Fraud

In most foreclosure cases, a lender must serve the homeowners with a summons, notifying them that legal action is being taken to foreclose on their home. This process is coming under increased scrutiny as judges raise concerns about the method of serving summons.

A notable example of this problem appeared in Florida in 2010, when Pasco County Circuit Judge Susan Gardner started taking note of the fees some legal service providers were charging to serve notices to homeowners. While Gardner estimated that the fees associated with a foreclosure in her court should have run no more than a few hundred dollars, she found reports of service providers charging fees of more than a thousand dollars [source: Behnken].

The law firms and legal service companies under the judge's scrutiny argued that the fees reflect the nature of foreclosures in the new millennium. They claimed that, with multiple names on some mortgages and the requirement that defendants be properly served notice in a foreclosure suit, the firms were simply covering the lenders by ensuring that everyone linked to the home had notice of the suits [source: Behnken].

The judge worried these service providers were taking advantage of highly stressed homeowners, who would ultimately have the fees added to the total judgments against them in the foreclosure. Legal actions can move fast -- and fees pile up in a hurry -- in a foreclosure, and that can leave open the door for unscrupulous parties to take more than their fair share of fees.